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Perfect Storm Brewing On Rising Corn Prices

Weather conditions, global factors, rising demand and competition of corn for food, livestock feed, fuel has many worried that corn supply might not be able to keep up with demand.

Source: Money Morning; By Kerri Shannon | Jun 21, 2011

Weather conditions, global factors, rising demand and competition of corn for food, livestock feed, fuel has many worried that corn supply might not be able to keep up with demand. Others fear what corn prices will look like come harvest time. Experts agree that even as corn production rises to record levels this year, it won't be enough to keep up with demand, and prices will climb.

"There is a storm developing in agriculture," says Jean Bourlot, global head of commodities at UBS AG. "If we have the slightest disruption in any part of the world, the effect on the price will be considerable."

"This is a very, very tight stocks situation," adds Todd Davis, crops economist with the American Farm Bureau Federation (AFBF). "We clearly need a big crop this year to build our supply reservoir. Farmers can still make up for planting delays brought on by flooding, but they clearly need cooperative weather in July and August to make a good corn crop."